LNG

By THIS IS MONEY
Updated:

 

The Daily Mail City team explains the benefits of Liquified Natural Gas

Come again?

Liquified Natural Gas, which is more or less what it sounds like.

It's gas, extracted from the ground, which is cooled until it turns into a liquid.

The beauty is that liquid gas can be transported by sea. That's cheaper than pumping the stuff from remote areas, via thousands of miles of costly pipeline, to its destination.

How does it work?

Imagine you've just extracted a load of gas (unlikely, but suspend disbelief).

You would fire it through an 'LNG train', which is essentially a lot of refrigerators laid end to end in a long train.

The gas flows through the train, getting progressively cooler until it reaches -162 degrees Celsius.

What then?

The LNG is loaded onto special cryogenic ships for transport to the recipient at a fixed price determined by a supply agreement, measured in mmpta (million metric tonnes per annum).

However, if another buyer offers more for your LNG, the cargo can be diverted to the highest bidder.

Sometimes the buyer losing out shares in the profit, depending on the contract.

Is it big business?

More so every day.

LNG is one of the fastest-growing energy sources, with global capacity set to double by the end of the decade, requiring more than £150bn of investment in liquefaction plants.

Now that's a whole lot more than just hot air.

Most watched Money videos